Breaking Up a Natural Monopoly into a Number of Smaller

question 74

Multiple Choice

Breaking up a natural monopoly into a number of smaller firms

• A)can lower the market price.
• B)decreases competition in the market.
• C)can lower costs.
• D)improves economic efficiency.
• E)does not improve economic efficiency.

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Definitions:

Variable Costs

Expenses that vary in direct proportion to changes in production or sales volume, such as raw materials and direct labor costs.

Sales

Revenue generated from goods or services exchanged by an entity during its normal business operations.

Break-even Analysis

An assessment to determine the sales volume at which total revenues equal total costs, indicating no net loss or gain.

Cost-volume-profit Analysis

An accounting technique that analyzes how changes in costs, sales volume, and price affect a company's profit.